a Be! What is VAT ? be: Concept of VAT ‘value-added ax (VAT) is a consumption tax placed ona product whenever valu fo the point af sale i Soi Sth gee Sap a om acon Sy Pes ao eee Foes) - 5Q- Vluo-added tation is ase on taxpayers consumption rater han hiincome, es VAT sa taxon il consumption which ig alte a eer tage of production a SORES athe eae efi “This is one type of Indirect tax : VAT In Bangladesh + Alter independence, there was no tax in Bangladesh under the head of ae a + In Apel 1979, the Taxation Enquiry commission (TEC) officially took up + Vatis the youngest member of the sales tax family ‘the issue of introducing VAT in Bangladesh as an alternate to sales tax. soos - Unis sas tres hig te wer he es ER I st Gren ro Win oo" Ul 102 sles tax wa big cles under he Ss Ac ak “ nduce the VAT concept Ist July 1982. > + 1921 USA Professor Thomas S. Admes itraduce Vat Final version of the VAT Act was promulgated 31 May 1991 a5 a — Presidential Ordinance with eight sections. It was made effective from 1 + In 1964, Fran isthe fis introduction county of VAT. shuterstck com 56455063,VAT vs Sales Tax be New Vat Act De + VAT & Supplementary Duty ACT 20) Aas Bos + AL rst Govt. had plat to introduce from 1* July 2016 but ean’ VAT is Mult pont avy system Sales Tax generally single point a = anne + Then new affected dete refed fom 1 July 2017: again can't, now this new In VAT fl set-off ofthe tx paid atthe In als Tat no tats Beng levied onthe + Major change made ia new Ast 2012 then Act 199 lie stage is granted ‘lus adtion on subrequent aes + This wil be effective fram Ist Jay 2019 through Finance Bill 2019 VAT eliminates tox cascading Sales Tax does not eliminate cascading Hct of tx aterm eile aa th mr er te ol 01 Vi 0 What is Tax as per new VAT Act BPP vate adcition in different level lS: > Value added tax; > Turnover taxi > Supplementary duty; » Interest & Fine of arrear collection;+ This is one type of Indirect tax ; vena os aoues Bette base of “impact and inejdence ot * This impact and incidence of taxes fall on different persons: Hoes agate halem mabe called + An important source of revenue financing of the Bangladesh een ae cance ‘It comprises more than 38% of government tax revenue in a ae aneanee so year * Government heavily relies on VAT. ete SE dada RE EGR Sa te so aes Tax Classification in Bangladesh BGM Budget : 2023-24 By: 7 worrox revenue (60450000) | birect tax Ingirect Tx | Cee | =a - rman aT ce —_—- er eres aa Import & Other Duy 52.200 cere Cat) Supplementary Outy 60,730 crore -Important Feature Advantage of VAT Disadvantages gi + VATT is the tax on the value added by a tax payer + This is one kindof indirect tax 18 chance to tax evasion \ + Unless exempted, VAT is pafable and the rate is mole administration cofhpare Unt eee ee ee to other tax ¥ Costly to implement + Some persons are nat required to be registered under VAT Act Se Complex to understand “VAT will be paid by the importer, suppliers and provider of taxable | "harden services > Self-assessment procedure: + On certain services estimated value addition is instructed for determining | >This is based on value added increase inflation. VAT: ‘ot on total price + This is one kind of self-assessment systems: > Mass participation systems. \ + Some hooks of accounts and documents are required to be maintained by the taxpayer Reasons/Economic impact in BD + To generate more internal resources: +o introduce VAT as the main vehicle for resource mobilization: + Bringing transparency on the taxation system: * Activating the overall economy by mobilizing more internal + Bringing the consistency in the Tax to GDP ratio: + Facilitate broadening to tax basTrpor Lave eanteve: 11 ry fracsnset Total Vat 1549434 na ee Consumer Lave nies jo 253 Dept Commissar or Deputy Ditetor VAT: e® VAT Authority @ 2 a AUTHORITY «The Boged shall carry out all the function, including the policy The Road Shan cand Siscnarge all the duties and exercise all Tether of te VAT Author “Tax collection and actives relating to keeping accounts tieiesk " + Apply the administrative function: + Power to enter and search by VAT officers: + Seizure of goods and disposal thereof ‘Any other fhnction or duties and responsibilities assigned to ein By the Bore a aVAT Act & Rules > Section -139 > Chapter : 18 > Schedule : 3 > Rule 1117 > Chapter: 18 > Several VAT Forms (Apx. 75) Definition Section_2 Money [$-206)1: means any existing Jegal tender the of Bangladesh or of any other Country, and also ineldes the following instruments wamely + Negotiable instewments Bill of exchanges, promissory note, bank draft, postal order, money order, ete + Credit card or debit cardi or + Any supply made through account eredit or debit —_—_—_— Definition Section_2 — zona Acti 2 Ds: ey sen tar actin, pga of sing vetitond, manuote f 0 att ay ere ened bye cays celore: RS ARS TV a Se a peeDefinition _Section_2 “Input ‘Thx [S-2019)] + Means the value added tax imposable on any y i property including 5 Fer oe aly goods or services or imvable propery ETRY S200 = oars the valu add ax ingot on, ang Fae cree a uposae on the taxable supply of imported goods )Is-24101 «Means the value added ta inposable on any oroorvises the value nuded tax a spasable on the taxable "af imported goods + Output tax (s-2(20)]: means the value added tax payable by any person for any of the following activity. namely! + Supply of any taxable goods or services or property by such person: + Import of any taxable goods or services by such person' Definition Section 2 PRB detinition section_2 bee Withholding entity [S-2(21)]: means ~ ‘Tax period [s-2 (30)]: means : * a government entity: + an non~ government organization approved by NGO affairs «jp relation to VAT and supplementary duty, one oF more Bureau of Directorate of Social Welfare: than one month ofthe Christian Calandra | or + a bank, insurance company or similar financial institution: * a post-secondary educational institution: + In relation to tumover tax, every three month period ending + a public limited company: or on 31 March, 30 fune, 30 September or 31 December: + an establishment registered under large taxpayers’ unit VAT:Definition _Section_2 Tax benefit [S-2 (34)]: means any one of the following benefits, namely +a reduction in the output tax liability: +a reduction in the VAT liability on an import of goods: + an increase in an excess carried forward or a reduction in the payable tax amount? + an increase in the entitlement to a decreasing adjustment: + decrease in an increasing adjustments +a refund of taxi + an understated turnover shown by a turnover taxpayer: Definition _Section_2 + air markot price (S-268)] : means! * The consideyation the supply would fetch in an open marke transaction frecly made between persons who are not assoctates! OF + ILit is not possible 10 determine a fair market price under paragraph (@), the consideration « simlar supply would fetch in an open market | + I itis not possible co determine a fair market price by above methods, it may'be determined using any_method approved by the Board for Calculating sn objective approximation of the consideration The Supply ‘Would fetch in an open market transaction freely made between persons who are not associates a PBF vetinition section 2 PRE Detinition _section2 Registration threshold [S-257)] : means the limits of Taka 3 coro as net turnover of an economic activity of any person, in 12 month period, bul does not include the following amounts, namely + the value of an exempted supply: + the value of sales of a capital asset: + the value of supply made for selling of an economic activity oF any part thereof + the value of supply made as consequence of permanently ceasing to carry on an economic activity: Goods [$-2(60)|, means, other than share or stock or security or rome, Sado Bai mean pedpers Representative [S-2(63)] : means ‘for a.mentally of hysically challenged individual, a guardian of 3 nde ole on None blficer of ie tompany npany in Hauidaion, for a partnership, a partner inthe partnership: “or a‘trust any trustee of the trust or an executor oF administrator of Suerte + Tor a government entity, the chief executive officer of the entity ‘or foreign Government, an officer appointment by it ‘Hor a non-resident, any VAT agent appointed by i ‘any olher prescribed representative hief executiveDefinition _Section_2 Person [S-2(74)] : means any individual, and also includes the following eatties, namely ~ + company + an association of persons: +2 foreign Government or a department designed by it or any officer Sppointment by it +2 public international organization’ or + property development joint venture or any other siilar venture Definition _Section_2 + Second-hand goods [S-2(98)] : means any such goods that used before, but does not include any valuable metal or any goods made of such Valuable metal (Guch as gold, silver, platinum or any other similar metal), tnd any diamond, rubies, emeralds or sapphires + + Services [S-2(99)] : means any service but do not include any goods or immovable property or money Bs [Adjustment event [S-2187] : means any one of the following events, namely ~ + cancellation of any supply # {alienation inthe amount of consideration for any supply ‘return of any supolied goods or any part thereof to the supplier “Conversion of a supply into zero-rated or exempted one as result of iteration inthe nature of such supply oF + any other prescribed event Imposition of VAT ne (s-15~26)+All goods imported in Bangladesh (except those goods mentioned athe First Schedule Part D and exemption SROs) +All goods supplied inside Bangladesh except those goods ‘mentioned? in the» Firsl Schedule (Part D) and exemptions SROs) “All services provided in Bangladesh (except those services mentioned inthe First Schedule (Part-I) and exemption SROs!) "2 1 (xcept ra Schedule goods) (PSH (not take rebate) 18% (take rabete) 108% fom a TE (except 3rd Schedule services) ‘development. 2, ‘garment egitation 2 ie 4.5% above 1600 30) and Re Person liable to pay value added tax Time of payment of VAT (S-33) + The MIE 2 the import stage in ease of imported goods: + Whon such supply is made +The HII, in case of goods manufactured in Bangladesh: + When a tax invoice for such supply is issued: + The HIME of services in ease of rendering of services + When a part or the whole of the consideration is received: and + KURI esse of services rendered from outside Bangladesh + When any spo is wed personaly or given ower for us + otter esses, (SST